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| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. |
Summary of Project Information (SPI) |
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| Project number | 11707 |
| Project name | Commercial Bank of Ceylon |
| Country | Sri Lanka |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Commercial Bank of Ceylon |
| Environmental category | FI-1/2 |
| Date SPI disclosed | November 25, 2002 |
| Projected board date | December 27, 2002 |
| Status | Active |
| Previous Events | Invested: March 14, 2003
Signed: March 6, 2003
Approved: January 13, 2003 |
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| Project sponsor and major shareholders of project company |
The project sponsor is the Commercial Bank of Ceylon (CBC), which in its over 30 years of existence became one of Sri Lanka’s leading banks measured in terms of profitability, capital, and management quality. CBC has a history that goes back to 1920, when Eastern Bank, one of the predecessors to CBC, was founded. CBC was established as a separate entity in 1969 with Chartered Bank holding 40% of its equity. Currently, CBC’s main shareholders include the Sri Lanka Insurance Corporation (SLIC) with almost 30% and DFCC, with approximately an additional 30%. The remainder of the bank is owned widely by individual and institutional investors.
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| Total project cost and proposed IFC investment |
IFC’s proposed investment into CBC will be a package of up to $25 million comprised of three elements:
- up to $10.5 million for the acquisition of 15% of CBC’s common shares from the Sri Lanka Insurance Corporation (SLIC), Sri Lanka’s largest life insurance corporation and a government owned institution which is being privatized;
- up to $4 million of short term funding for the purchase of 5% of CBC’s common shares for CBC’s employee stock ownership plan.; and
- a long term loan of up to $10 million.
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| Location of project and description of site |
CBC is headquartered in Colombo, Sri Lanka and has over 100 branches throughout the country.
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| Description of company and purpose of project |
Through its equity investment IFC will buy a large block of shares from a government owned institution which will reduce government shareholding in CBC. By providing funding for a portion of the shares of CBC for its employees, IFC will help to align employee and shareholder interests, by making the former part owners of the bank. The provision of longer term financing to a strong financial institution which operates in a difficult macro-economic environment will allow CBC to extend the maturities of its loans to sub-borrowers and lengthen the maturity of the Bank’s liabilities. In addition, the project would facilitate the privatization of Sri Lanka's largest insurance company and also provide a demonstration effect to strengthen the government's privatization program.
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| Environmental and social issues - Category FI-1/2 |
This is a Financial Intermediary (FI) Type 1/Type 2 project according to IFC's environmental review procedure. CBC must establish an environmental management system to require relevant operations to comply with the environmental laws of Sri Lanka, and for projects funded by the loan or guarantee facility, applicable World Bank Group environmental, health and safety guidelines and IFC safeguard policies
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| To contact the project company, please write to: |
Thomas Lubeck, Investment Officer
Email: tlubeck@ifc.org |
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